What does the future look like after the promoters sell their stake?

interglobe airlines: India has the world’s most populous population and the 5th largest global economy. India will soon become the third largest economy. As the population grows, travel and tourism are also booming. Air travel, which was considered a luxury just a few years ago, has now become accessible to the public. The Indian aviation industry grew 14.5% year-on-year to reach 184 million passengers per year in FY24.

The aviation industry includes airlines, airports, aircraft manufacturers, air traffic control, and support services. The industry contributed $3.5 trillion (4%) to global GDP. India will become the third largest aviation market in the world. With this background, let’s take a look at India’s largest airline, Interglobe Aviation Limited, also known as Indigo, and its future plans.

Interglobe Aviation Company Overview

interglobe airlines(IndiGo): Founded in 2006, the founders are Rahul Bhatia and Rakesh Gangwal. It is one of the largest aviation sectors in India, accounting for 60.6% market share. The company provides low-cost air services that do not mean low-quality service to passengers. The vision is to make Interglobe Aviation the world’s leading global aviation company. This will make India a global aviation hub.

In FY19, IndiGo was the first airline to operate 1,500 daily flights and have a fleet of 250 aircraft. It has now reached 367 aircraft. It was the first Indian airline to carry more than 100 million passengers in FY23. The company has a network in domestic stations, metropolitan cities and international destinations. The company reported 32,407 employees in FY23.

Interglobe Aviation’s products (aircraft)

IndiGo operated a fleet of 367 aircraft in FY24, including 31 under owned/financed leases, 323 under operating leases and 13 under wet leases.

1. A320 neo: 192 aircraft with seating between 180 and 186 passengers.
2. A320 CEO: 31 aircraft with 180 passenger seats.
3. A321 neo: 94 aircraft with seating between 222 and 232 passengers.
4. ATR: 45 aircraft with 39 passenger seats.
5. A321 Freighter: 3 aircraft with a carrying capacity of 27 tonnes
6. B777-300ER: Two Damp leased aircraft with a seating capacity of 400 passengers.

operate Interglobe Airlines

IndiGo currently operates over 2000 flights daily to over 30 international destinations with a fleet of 367 aircraft for over 500 million happy passengers across the world. The company provides air services to both domestic and international destinations.

Domestically, there are 88 destinations with over 400 routes. The company adds 10 destinations in FY23. Its international network includes 100 direct international routes from 18 cities in India to 33 destinations. Direct flights increased by 25% with the addition of seven international destinations across Asia and Africa. In FY24, the company achieved a massive 45% growth in flight passenger numbers through codeshare partnerships.

Indigo flew over 1800 daily flights in FY23 to connect 500 domestic and international cities. It was the 7th biggest start of each day. The company operates 104 destinations in FY23. We are adding more destinations – 5 domestic destinations and 2 international destinations – Ras Al Khaimah, Itanagar, Mopagoa, Nashik and Dharamshala.

Interglobe flight costs

When it comes to the cost side of the business, running the business to achieve its goals has been very brutal. Let’s say a company needs to optimally utilize its resources to reduce costs. Indigo is famous for its cheap air services compared to other companies.

Indigo’s total expenses increased by 12.5% ​​from $5,61,858 million in FY23 to $6,31,819 million in FY24. CASK companies decreased by 9.3% from Rs 4.83 to Rs 4.38 compared to FY24, but in CASK, excluding fuel and foreign exchange, it increased by 4.3% compared to FY24.

On the other hand, even with increased number of aircraft and more destination routes, fuel cost decreased from ₹2.07 in FY23 to ₹1.72 in FY24. The company has achieved its goal of providing low-cost air services. shareholder value.

Finance at Interglobe Aviation

In this section, you can find Indigo’s financial metrics before, after, and during COVID-19.

Before the COVID-19 pandemic

In FY20, IndiGo revenue grew year-on-year at a compound annual growth rate (CAGR) of 20.76% over the past five years. Pre-Covid revenue was 28496 Cr. In FY19. It increased by 23.79% compared to the previous year. IndiGo’s revenue rose from ₹28,496 Cr. FY19 – 35,756 Cr. In FY20.

The company’s net profit increased by 35.15% in FY18. At this point, the company was also generating good revenue and net profit. The company’s net profit declined significantly from ₹2,242.37 Cr in FY19. 156.14 Cr in FY18. This is due to a 25.3% increase in overall costs in FY20 compared to FY19, including a 4.3% increase in aircraft fuel costs, a 46.7% increase in staff costs, and a 41.5% increase in aircraft ownership costs.

About the COVID-19 pandemic

Due to travel restrictions, lockdowns and concerns over the spread of COVID-19 during COVID-19, the company’s revenue declined by 59.06% in FY21 and there was also a drastic change in passenger numbers. Net loss increased significantly from -248.16 in FY20 to -5829.79 in FY21. This is due to a decrease in sales, aircraft leasing and maintenance costs, forexDepreciation, labor costs, and finance costs have increased.

In FY22, compared to FY21, revenue increased by 77.12% but net loss increased from -5829.79 to -6171.03 Cr. The reason is that costs increased compared to the same period last year. Net profit turned into a deficit. In the context of COVID-19, the company has been transporting medical equipment resources across India at its own cost.

After the COVID-19 pandemic

IndiGo has started to recover post-corona. The revenue in FY23 doubled compared to the previous year and most importantly, the net loss recovered significantly from ₹6171.03 Cr. 316.72 Cr in FY22. In FY23, the company managed costs by 5-25% in the form of salary reductions, so it implemented furloughs in May, June and July in anticipation of low-paid employees. The company has discretionary expenses and capital expenditure projects. This will help you recover your net losses and increase your profits.

current situation

In FY24, IndiGo reported revenue of ₹712.312 crore, up 27.5% over FY23, with a profit of approximately ₹820 crore against net loss of ₹316.72 crore in FY23. Over the past five years, the company has recorded profits in six consecutive quarters, but in FY24, it recorded profits in all quarters. In FY24, the company recorded EBITDAR of 175.4 billion compared to EBITDAR of 73.1 billion in FY23.

Also read…

Financial Metrics of Interglobe Aviation

IndiGo’s key financial metrics include:

Why do promoters sell?

IndiGo promoter Rahul Bhatia’s family sold 2% stake, which is nearly 77% short of Rs. The latest is 4,362 per share. The transaction price is 5,000 won. $336.7 billion. A lock-in period of 365 days applies. The money will be used to increase awareness of the hospitality business, particularly in Europe. This was the first time that the promoters of Rahul Bhatia family had sold their stake after the IPO.

Interglobe Aviation’s future plans

• Interglobe Aviation has signed the largest bulk aircraft purchase order with Airbus ever for an airline.
• IndiGo has decided for the future and ordered 500 A320 neo family aircraft, valuing the deal at $55 billion. Delivery of the aircraft is scheduled for fiscal years 2030 to 2035.
• In FY24, Interglobe Aviation added 65 aircraft, including 12 temporary leased aircraft, and added nine aircraft to the company’s fleet in the March quarter.
• Interglobe Aviation plans to double its capacity in FY25 compared to the previous year’s FY24.
• IndiGo is targeting production capacity of around 10-12% compared to the same quarter last year. It will be 3-5% YOY.
• The company’s order book will be for 1,000 aircraft, scheduled for delivery by 2035.
• Interglobe Aviation aims to double the company’s size by 2030 and expand its domestic and international routes.
• For international flights, a code-sharing agreement was signed with British Airways, and seven new connecting flights to Australia and Singapore were prepared through partnerships with Malaysia Airlines and Qantas.
• The company is planning to expand its business. A321 XLR aircraft It will apply to international routes worldwide until 2025.
• IndiGo announced an order for 30 Airbus A350-900 aircraft and also announced plans to purchase 70 more aircraft for future international routes.

conclusion

The bottom line is that Interglobe Aviation achieved a remarkable milestone in FY24, achieving a net loss of $82 billion to a net profit of $82 billion. The company is managed through cost reduction and the primary focus is on cost optimization to create maximum shareholder value. IndiGo now carries more than 100 million passengers annually.

Interglobe Aviation has a strong foundation to achieve sustainable growth in YOY. The company is focused on achieving 3-5% year-on-year growth and doubling production capacity in FY25 compared to FY24. The company has a future goal of doubling its size in FY30 by improving its destination routes. For this purpose, the company plans to purchase 500 aircraft. It will help propel the company forward as it remains one of the largest airlines in India.

Written by Nikhil Naik

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